Filed 2/27/19; Modified and Certified for Partial Publication 3/27/19 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

FARMERS & MERCHANTS TRUST 

COMPANY, as Trustee, etc.,

Plaintiff and Respondent,

 v.

YURI VANETIK et al.,

Defendants and Appellants.

 G053688 (consol. with G053689,

 G054218)

 (Super. Ct. No. 30-2013-00688150)

 

FARMERS & MERCHANTS TRUST 

COMPANY, as Trustee, etc.,

Plaintiff and Appellant,

 v.

RICHARD WEED et al.,

Defendants and Appellants.

 G053978

 

 (Super. Ct. No. 30-2013-00688150)

 O P I N I O N

Appeals from judgments and postjudgment orders of the Superior Court of 

Orange County, Ronald L. Bauer, Judge. Appeal Nos. G053688 and G053689 affirmed

in part and reversed in part. Appeal No. G053978 affirmed. Cross-appeal in appeal 

No. G053978 dismissed as moot. Appeal No. G054218 affirmed. Motion to augment 

appellate record. Denied.

Klapach & Klapach and Joseph S. Klapach for Defendant and Appellant 

Yuri Vanetik.
2

Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup; Hamilton Law 

Offices and John Michael Hamilton for Defendant and Appellant Anatoly Vanetik.

Law Office of Jim P. Mahacek and Jim P. Mahacek for Plaintiff and 

Appellant Farmers and Merchants Trust Company.

White & Reed and Michael R. White for Defendants and Appellants 

Richard Weed, Weed & Co., L.C., and Weed & Co. LLP.

* * *

INTRODUCTION

Yuri Vanetik and his father, Anatoly (Tony) Vanetik, were involved with a 

number of interrelated companies in the business of oil exploration in Russia. (To avoid 

confusion, we will refer to Yuri and Tony by their first names; we intend no disrespect.) 

Yuri approached his friend, Elliot Broidy, about investing in one of those companies, 

Terra Resources (Terra). Broidy agreed to invest $750,000, with the written agreement 

his investment would go only to efforts to start production on the oil wells. 

Farmers & Merchants Trust Company (F&M Trust) was the trustee and 

administrator of the simplified employee pension plan (SEP) for Broidy’s individual 

retirement account (IRA). F&M Trust acquired stock in Terra. Broidy later learned that 

his investment had not been used in connection with the oil wells. Rather, the money had 

been used to pay off Yuri’s and Tony’s preexisting debts.

Broidy and Tony orally agreed that Tony would pay back the $750,000; 

Tony failed to do so. F&M Trust then sued Yuri and Tony for breach of written and oral 

contracts, and for fraud. F&M Trust also sued Richard Weed (the attorney for Yuri, 

Tony, and the oil exploration companies) for fraud. (Weed and his law firm, at different 

times known as Weed & Company, L.C., and Weed & Company LLP, will be referred to 

collectively in this opinion as the Weed defendants.) The jury found in favor of 

F&M Trust on all causes of action, and awarded compensatory and punitive damages 

against Yuri, Tony, and the Weed defendants. Judgment was entered against Yuri and 
3

Tony; the trial court granted judgment notwithstanding the verdict (JNOV) in favor of the 

Weed defendants.

On appeal, we conclude that substantial evidence supported the jury’s 

verdict against Yuri and Tony on the claims for breach of written contract, breach of oral 

contract, and fraud. The jury’s special verdict findings on the contract and fraud claims 

neither resulted in inconsistent verdicts, nor required F&M Trust to make an election of 

remedies. However, F&M Trust failed to offer substantial evidence supporting the 

punitive damages awards against Tony and Yuri. We reverse those punitive damage 

awards, but otherwise affirm the judgment in favor of F&M Trust and against the 

Vanetiks.

We further conclude the trial court properly granted JNOV in favor of the 

Weed defendants on the fraud causes of action. There was no evidence that the Weed 

defendants had an independent duty to F&M Trust, or that their actions went beyond the 

ordinary performance of professional duties as the Vanetiks’ legal counsel. We therefore 

affirm the judgment in favor of the Weed defendants and against F&M Trust. 

We further affirm the postjudgment orders awarding attorney fees to 

F&M Trust as the prevailing party on its judgment against Yuri and Tony, and awarding 

attorney fees to the Weed defendants as the prevailing parties on their judgment against 

F&M Trust. 

STATEMENT OF FACTS

Elbrus Energy Group, Ltd. (Elbrus) was formed by Tony, Alex Sulla, Jed 

Dolkart, and Dean Miller in 2009 to acquire and develop oil concessions in Kalmykia, 

Russia. (A concession is a right to remove oil with the government receiving some of the 

income.) Yuri helped capitalize the company by providing $750,000 in startup funds. 

Terra was established to own the equity of Elbrus and facilitate the raising of capital and 

the addition of new shareholders.
4

Broidy was a friend of Yuri’s. In late 2010, Yuri informed Broidy of 

Terra’s oil exploration business in Russia. Broidy decided to invest $750,000 in Terra.

Broidy performed due diligence before making his investment, hiring an 

international oil and gas consulting company called Pace Global to investigate Terra’s oil 

concessions. Pace Global advised that it was “comfortable” with the deal and “felt there 

was oil there and time would tell whether we could extract.” Pace Global also advised 

Broidy that it did not see any “fatal flaws” and thought there could be significant reserves 

of oil in the concessions. Pace Global described the investment as an extremely high-risk 

investment: “While that may lead to higher returns, it is critical to understand that these 

fields are much higher risk and could be technically challenging.”

Broidy wanted his investment to go strictly into uncapping the wells and 

making them productive. The securities purchase agreement specified: “SELLER 

covenants to use funds from Initial Purchase in furtherance of efforts to start production 

on the 85,000 acre Concession in Kalmykia owned by NK Alliance LLP.” Broidy was 

willing to accept the risk that the wells might not produce any oil. Yuri told Broidy that 

his $750,000 investment would uncap some of the wells, although Yuri knew that the true 

cost of uncapping a single well could be in excess of $1.5 million. The Vanetiks told 

Broidy that Terra was financially stable. Broidy would not have invested in Terra if he 

had known about the amount of debt it was carrying. The Vanetiks did not tell Broidy 

they had personal financial claims against Terra.

Broidy acquired his Terra stock from KLEL Funds (KLEL), a subsidiary of 

Terra. Broidy was told the Vanetiks controlled KLEL, and the transaction was being run 

through KLEL as an accommodation to the Vanetiks. The stock was sold to F&M Trust 

as the trustee and administrator of Broidy’s SEP IRA, rather than directly to Broidy. 

Broidy’s attorney, David Camel, prepared the purchase documents with Weed, who was 

acting as counsel for Terra and KLEL. 
5

On March 11, 2011, Broidy and KLEL executed a securities purchase 

agreement. Neither Tony nor Yuri nor any of the Weed defendants were signatories of 

the securities purchase agreement.

Concurrently with the securities purchase agreement, Broidy and KLEL 

executed an escrow agreement with Weed & Company LLP to facilitate the stock 

transfer. Neither Tony nor Yuri was a signatory to the escrow agreement.

Broidy’s investment was used by Terra to repay loans, reimburse expenses, 

and pay operating expenses; none of Broidy’s investment was used directly to develop 

the oil concessions.

Yuri advised Broidy that things were going well, wells were being 

uncapped, and Terra had contracted with Baker Hughes, the oil development company 

that would supervise the project and manage the capital. Baker Hughes, however, had 

not been paid.

Terra’s brokerage firm in Germany, Euroline Bankers, owed a custodian 

fee to Baader Bank, Terra’s custodial bank. Baader Bank liquidated a large quantity of 

Terra’s stock to satisfy the debt, seriously depressing the value of Terra’s stock. Terra 

was later delisted from the Frankfurt Stock Exchange. Both Yuri and Miller sold their 

Terra stock.

In 2013, Broidy advised Yuri and Tony he was unhappy with his Terra 

investment. According to Broidy, Tony said “he was going to give me my money back.” 

Tony also told Broidy: “I promise you you won’t lose one penny. I’m going to give you 

your money back.” Yuri told Broidy: “It’s up to my father. I think my father will make 

it right.” 

In June 2013, Camel and Weed exchanged a series of e-mails regarding a 

proposed settlement. Camel forwarded a proposed stock purchase agreement to Weed. 

The accompanying e-mail read, in relevant part: “Following up our conversation earlier 

today, attached is a Stock Purchase Agreement along with a draft letter cancelling the 
6

Option. Please let me know if you have any comments regarding the Agreement or the 

letter. Also, please send me the name of the buyer and when your client can close. [¶] 

My client is concurrently reviewing the documents and they are subject to his review, 

comment and approval.” 

On June 17, Camel wrote to Weed: “It has been ten days since I last heard 

from you, 14 days from when the Stock Purchase Agreement was first sent to you and 

over six weeks from when our clients first addressed this matter. [¶] If we are going to 

successfully resolve this matter without the involvement of litigation attorneys, we need 

to have an executed Agreement by the end of this week along with an initial minimum 

payment of $250,000. Please contact your client and let me know if that is going to 

happen. If not, per my previous emails, my client will direct his litigation counsel at 

Latham & Watkins to vigorously pursue all rights and remedies on his behalf against all 

parties.”

On July 25, 2013, Broidy e-mailed Tony: “While I truly appreciate your 

repeated assurances that you will buy out my Terra shares at cost of $750,000, you are 

moving far too slowly. Please instruct your attorney Rick Weed to complete and deliver 

the executed note and associated documents today. I require a $250k down payment by 

the 31st of July and the balance of $500k by Aug 15th. . . . I have been more than 

patient. It is now time for you to perform. Thank you in advance for making this 

happen.” The repurchase of Broidy’s stock never occurred.

PROCEDURAL HISTORY

F&M Trust, as administrator and trustee of Broidy’s SEP IRA, initiated the 

lawsuit in November 2013. The operative first amended complaint asserted causes of 

action for breach of a written contract, breach of the covenant of good faith and fair 
7

dealing, negligent misrepresentation, fraud, negligence, constructive fraud, breach of 

fiduciary duty, unfair competition, and for an accounting.1

Shortly before the scheduled trial date, F&M Trust sought leave to amend 

to file a second amended complaint. F&M Trust proposed adding, among other things, a 

cause of action for breach of oral contract based, in part, on the alleged promises of 

Terra, Tony, and Yuri to pay Broidy back his $750,000 investment. The trial court 

denied the motion for leave to amend.

The case proceeded to trial before a jury, with certain matters bifurcated for 

a later bench trial. After all parties had rested their cases before the jury, F&M Trust 

made an oral motion to amend the complaint to add a cause of action against Yuri and 

Tony for breach of an oral contract—the agreement between Broidy and the Vanetiks in 

2013 to buy back Broidy’s Terra stock for $750,000. The court granted the motion to 

amend.

The Weed defendants then made a motion for nonsuit of the cause of action 

against them for breach of the securities purchase agreement. The trial court granted the 

motion because the Weed defendants were not parties to that agreement.

The jury rendered a special verdict finding:

1. Yuri and Tony breached the written securities purchase agreement; 

2. Yuri and Tony breached the oral contract to repay F&M Trust; 

3. None of the defendants was liable for negligent misrepresentation; 

4. All defendants made false representations, intentionally concealed facts, 

and made false promises; 

5. All defendants violated Business and Professions Code section 17200; 

 

1

 The causes of action for negligence, constructive fraud, and breach of fiduciary duty 

were alleged only against the Weed defendants; all other causes of action were alleged 

against all defendants. A cause of action for violations of the Corporations Code was 

withdrawn by F&M Trust during trial.
8

6. F&M Trust suffered compensatory damages in the amount of $750,000; 

and 

7. By clear and convincing evidence, all defendants engaged in the conduct 

underlying the causes of action for intentional misrepresentation, fraudulent concealment, 

and false promise with malice, oppression, or fraud.

After a second phase of the trial, the jury found that F&M Trust was 

entitled to recover punitive damages from all defendants in the following amounts:

1. Yuri: $2,000,000

2. Tony: $1,250,000

3. Richard Weed: $110,000

4. Weed & Co., LLP: $1

5. Weed & Co., L.C.: $1

The court then conducted a bench trial on the causes of action for breach of 

fiduciary duty, constructive fraud, and breach of the escrow agreement against the Weed 

defendants. The court concluded that each of these causes of action failed. The court 

also concluded that the cause of action for unfair competition against all defendants must 

be dismissed. 

The Vanetiks’ motion to compel an election of remedies by F&M Trust was 

denied. The Vanetiks and the Weed defendants separately objected to the proposed 

judgment on grounds of election of remedies. Those objections were overruled.

On April 15, 2016, judgment was entered based on the jury’s verdicts and 

the court’s ruling after the bench trial. The Vanetiks filed motions for JNOV and for a 

new trial. The trial court denied the Vanetiks’ motions. Yuri and Tony each filed a 

notice of appeal from the judgment and the postjudgment order denying their motions for 

JNOV and for a new trial.
9

F&M Trust filed a motion for attorney fees against the Vanetiks. The trial 

court awarded F&M Trust $850,000 in attorney fees against the Vanetiks. The Vanetiks 

filed a notice of appeal from the attorney fees order. 

The Weed defendants also filed motions for JNOV and for a new trial. The 

trial court granted the Weed defendants’ motion for JNOV; the court did not rule on the 

new trial motion, declaring that the JNOV “essentially moots the Weeds’ motion for a 

new trial.” On July 8, 2016, the trial court entered a judgment that F&M Trust take 

nothing from the Weed defendants.

The Weed defendants then filed a motion to recover attorney fees. The 

court awarded the Weed defendants $325,000 in attorney fees against F&M Trust. 

F&M Trust filed a notice of appeal from the judgment in favor of the Weed defendants, 

and the award of attorney fees in favor of the Weed defendants. The Weed defendants 

filed a protective cross-appeal from the judgment, challenging the denial of their motion 

for a new trial in the event the appellate court reversed the trial court’s order granting the 

JNOV. 

DISCUSSION

I.

THE FINDINGS IN THE JURY’S SPECIAL VERDICTS ARE NOT INCONSISTENT.

Yuri and Tony argue that the jury’s verdict on the claim for breach of the 

oral contract is inconsistent with its verdicts on the other claims the oral contract was 

purportedly intended to resolve. “‘Inconsistent verdicts are “‘against the law’”’ and are 

grounds for a new trial. [Citations.] ‘The inconsistent verdict rule is based upon the 

fundamental proposition that a factfinder may not make inconsistent determinations of 

fact based on the same evidence. The rule finds parallel expression in the law relating to 

court findings: “Where the findings are contradictory on material issues, and the correct 

determination of such issues is necessary to sustain the judgment, the inconsistency is 

reversible error.”’ [Citations.] An inconsistent verdict may arise from an inconsistency 
10

between or among answers within a special verdict [citation] or irreconcilable findings. 

[Citation.] Where there is an inconsistency between or among answers within a special 

verdict, both or all the questions are equally against the law. [Citation.] The appellate 

court is not permitted to choose between inconsistent answers.” (City of San Diego v. 

D.R. Horton San Diego Holding Co., Inc. (2005) 126 Cal.App.4th 668, 682.)

The jury made the following findings regarding the claim for breach of the 

securities purchase agreement: (1) the Vanetiks entered into a written securities purchase 

agreement with F&M Trust; (2) all conditions required for the Vanetiks’ performance 

occurred; (3) the Vanetiks breached the securities purchase agreement; and 

(4) F&M Trust was harmed by the Vanetiks’ breach. Regarding the claim for breach of 

oral contract, the jury found: (1) the Vanetiks entered an oral contract to repay 

F&M Trust; (2) all conditions required for the Vanetiks to perform occurred; (3) the 

Vanetiks breached the oral contract; and (4) F&M Trust was harmed by the Vanetiks’ 

breach. Regarding the fraud claims, the jury found: (1) the Vanetiks made a false 

representation to Broidy; (2) the Vanetiks knew the representation was false, or made the 

representation recklessly and without regard for its truth; (3) the Vanetiks intended that 

Broidy and F&M Trust rely on the representation; (4) Broidy and F&M Trust reasonably 

relied on the representation; and (5) their reliance on the representation was a substantial 

factor in causing harm to Broidy and F&M Trust.2

To summarize, the jury found that the Vanetiks defrauded Broidy before 

entering into the written securities purchase agreement; breached the securities purchase 

agreement; entered an oral contract in the hope of avoiding litigation; and then breached 

the oral contract as well. There is nothing inconsistent in the jury’s findings. 

A comparison with cases in which the verdicts were inconsistent supports 

our conclusion here. In City of San Diego v. D.R. Horton San Diego Holding Co., Inc., 

 

2

 The jury’s findings regarding the claims for false promise and fraudulent concealment 

were similar.
11

supra, 126 Cal.App.4th 668, the jury’s special verdict included two different findings 

about the value of the property in an eminent domain action. (Id. at pp. 682-683.) In 

Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal.App.4th 338, 359, the appellate 

court concluded that the findings in the jury’s special verdict that the defendants made no 

promises or misrepresentations to the plaintiff regarding his employment were 

“inconsistent with and cannot be reconciled with the jury’s other findings” that the 

defendants fraudulently misrepresented and concealed important facts regarding the 

plaintiff’s employment. In Lambert v. General Motors (1998) 67 Cal.App.4th 1179, 

1182, a products liability case, the jury found there was no defect in the design of the 

Chevrolet Blazer, but then found General Motors was negligent in the design of the 

Chevrolet Blazer. The appellate court held that these findings were inconsistent because 

General Motors could not be deemed negligent if the design was not defective. (Id. at 

p. 1186.) In the present case, none of the jury’s factual findings was inconsistent with 

any other factual finding. 

II.

THE TRIAL COURT DID NOT ERR BY PERMITTING F&M TRUST TO ADD A CLAIM FOR BREACH 

OF ORAL CONTRACT AFTER THE PARTIES RESTED DURING THE FIRST PHASE OF THE TRIAL.

After the close of evidence, the trial court granted F&M Trust’s oral motion 

to amend the complaint to add a cause of action against Yuri and Tony for breach of the 

oral contract made by Tony to buy back Broidy’s Terra shares. “‘Leave to amend a 

complaint is . . . entrusted to the sound discretion of the trial court. “ . . . The exercise of 

that discretion will not be disturbed on appeal absent a clear showing of abuse. More 

importantly, the discretion to be exercised is that of the trial court, not that of the 

reviewing court. Thus, even if the reviewing court might have ruled otherwise in the first 

instance, the trial court’s order will yet not be reversed unless, as a matter of law, it is not 

supported by the record.”’” (Branick v. Downey Savings & Loan Assn. (2006) 39 

Cal.4th 235, 242.)
12

A.

The Vanetiks Failed to Establish the Breach of Oral Contract Claim 

Was Barred by the Statute of Limitations.

A cause of action for breach of an oral contract is subject to a two-year 

statute of limitations. (Code Civ. Proc., § 339, subd. 1.) The burden was on the Vanetiks 

to prove the statute of limitations had run on the claim for breach of an oral contract, 

unless facts proving the expiration of the statute appear on the face of the complaint. 

(Wise v. Williams (1887) 72 Cal. 544, 548.) 

In this case, the claim for breach of oral contract was added by means of an 

oral motion, and there is no “face of the complaint” to review. The proposed second 

amended complaint for which F&M Trust sought leave to amend in September 2015 

alleged that the breach of the oral contract occurred in November 2013: “In or around 

July, 2013, Mr. Broidy, as the beneficiary for Plaintiff, was told by Anatoly, Yuri, Weed 

and Yuri[] and Anatoly’s counsel, Steve Brown, on numerous occasions that Terra, 

Anatoly and/or Yuri would pay back Plaintiff the entire amount of $750,000.00. This 

included oral representations between these parties that Yuri and Anatoly would 

personally guaranty such payment to Plaintiff. The terms of the subject agreement were 

to be complied with no later than November, 2013.” (Italics added.) There was no 

testimony at trial regarding the date by which the oral contract to repurchase Broidy’s 

Terra stock was to be completed. Camel e-mailed Weed on June 17, 2013 that “we need 

to have an executed Agreement by the end of this week.” On July 25, 2013, Broidy 

e-mailed Tony: “Please instruct your attorney Rick Weed to complete and deliver the 

executed note and associated documents today. I require a $250k down payment by the 

31st of July and the balance of $500k by Aug 15th.”

The date by which the buy back was to occur was a moving target. The 

contract was not breached until the buy back was refused, or until an absolute end date 

passed without performance. Such a date does not appear in the record. The Vanetiks 
13

therefore failed to prove the breach of oral contract occurred more than two years before 

the claim was added to the complaint in November 2015.3

B.

F&M Trust Established the Existence of a Sufficiently Final and Definite Contract.

The Vanetiks also argue that the trial court erred by permitting F&M Trust 

to amend the complaint because the alleged oral contract was not sufficiently final or 

definite to be enforced. An agreement to agree is not enforceable under California law. 

(Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 213.) 

However, a contract may be enforced when its general terms are agreed 

upon, although not all of the specifics of the contract have been settled. “‘Under 

California law, a contract will be enforced if it is sufficiently definite (and this is a 

question of law) for the court to ascertain the parties’ obligations and to determine 

whether those obligations have been performed or breached.’ [Citation.] ‘To be 

enforceable, a promise must be definite enough that a court can determine the scope of 

the duty[,] and the limits of performance must be sufficiently defined to provide a 

rational basis for the assessment of damages.’ [Citations.] ‘Where a contract is so 

uncertain and indefinite that the intention of the parties in material particulars cannot be 

ascertained, the contract is void and unenforceable.’ [Citations.] ‘The terms of a contract 

are reasonably certain if they provide a basis for determining the existence of a breach 

 

3

 The parties argue about whether the relation-back doctrine can save the breach of oral 

contract cause of action from being barred by the statute of limitations. “The relationback doctrine requires that the amended complaint must (1) rest on the same general set 

of facts, (2) involve the same injury, and (3) refer to the same instrumentality, as the 

original one.” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 408-409.) “An amended 

complaint relates back to an earlier complaint if the amended complaint is based on the 

same general set of facts, even if the plaintiff alleges a different legal theory or new cause 

of action.” (Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2016) 

6 Cal.App.5th 1207, 1221-1222.) Our conclusion, ante, that the Vanetiks failed to prove 

the breach of oral contract cause of action was filed more than two years after that 

contract was breached obviates the need to address this argument.
14

and for giving an appropriate remedy.’ [Citations.] But ‘[i]f . . . a supposed “contract” 

does not provide a basis for determining what obligations the parties have agreed to, and 

hence does not make possible a determination of whether those agreed obligations have 

been breached, there is no contract.’” (Bustamante v. Intuit, Inc., supra, 141 

Cal.App.4th at p. 209.)

There is no real dispute about the terms of the oral contract. According to 

Broidy, he told Tony he was unhappy with the Terra investment, and Tony promised he 

would give Broidy his money back. The e-mails exchanged between Camel and Weed as 

the legal representatives of Broidy and Tony are consistent with this understanding.4 The 

involvement of the legal representatives in documenting the agreement does not make it 

unenforceable for lack of certainty.

Nothing in the record supports the inference that Broidy and Tony did not 

intend their oral contract to be binding until a formal writing was executed. (See Beck v.

American Health Group Internat., Inc. (1989) 211 Cal.App.3d 1555, 1562.) The cases 

the Vanetiks cite in support of this argument are federal cases interpreting New York law, 

and are not helpful to our analysis. (See Winston v. Mediafare Entertainment Corp. (2d 

Cir. 1985) 777 F.2d 78; R.G. Group, Inc. v. Horn & Hardart Co. (2d Cir. 1984) 751 F.2d 

69.) 

Camel testified that he called Weed after communicating with Broidy, “and 

my recollection is that he was aware that our respective clients had reached a settlement 

of this transaction.” Camel testified the settlement “was pretty straightforward. We 

would give back the stock and our rights, and my client would get his money back. And 

they would essentially just walk away from the transaction.” Based on his conversation 

with Weed, Camel understood “that Mr. Weed understood that there was an agreement 

 

4

 Tony denied there was an agreement to buy back Broidy’s Terra stock, and Yuri 

testified Broidy mentioned he was “amenable” to selling back his shares, but that Yuri 

was not involved in any discussions about a deal.
15

between Mr. Broidy and the Vanetiks to repay the 750 to Mr. Broidy, and he would 

return the stock,” and that “[t]here w[ere] no deal point issues.”

C. 

The Admission of Evidence Regarding the Oral Contract Did Not Violate 

Evidence Code Section 1152.

The Vanetiks and the Weed defendants filed a motion in limine to “exclude 

evidence of settlement negotiations,” specifically e-mails from Broidy and other evidence 

of settlement negotiations. Following a hearing, the trial court denied the motion in 

limine without prejudice.

As discussed more fully ante, Broidy testified that Tony promised to give 

back his money and that Yuri said, “I think my father will make it right”; Camel and 

Weed exchanged e-mails regarding a draft settlement agreement; and Broidy e-mailed 

Tony regarding Tony’s “repeated assurances that you will buy out my Terra shares at cost 

of $750,000.”

Generally, statements made in an attempt to compromise a dispute are 

inadmissible at the trial of the dispute. (Caira v. Offner (2005) 126 Cal.App.4th 12, 35-

36.) The trial court’s decision to admit evidence over an objection based on Evidence 

Code section 11525is reviewed on appeal for abuse of discretion. (Hawran v. Hixson

(2012) 209 Cal.App.4th 256, 296.) 

 

5

 As is relevant here, Evidence Code section 1152 provides: “(a) Evidence that a person 

has, in compromise or from humanitarian motives, furnished or offered or promised to 

furnish money or any other thing, act, or service to another who has sustained or will 

sustain or claims that he or she has sustained or will sustain loss or damage, as well as 

any conduct or statements made in negotiation thereof, is inadmissible to prove his or her 

liability for the loss or damage or any part of it. [¶] . . . [¶] (c) This section does not 

affect the admissibility of evidence of any of the following: [¶] . . . [¶] (2) A debtor’s 

payment or promise to pay all or a part of his or her preexisting debt when such evidence 

is offered to prove the creation of a new duty on his or her part or a revival of his or her 

preexisting duty.” (Id., subds. (a), (c)(2).)
16

Evidence relating to the negotiations between Broidy and Tony to resolve 

the claims for breach of the securities purchase agreement and for fraud was offered not 

to prove those claims, but to establish the separate claim for breach of oral contract. 

“Accepting defendants’ evidence that Nicholas and Paul were negotiating a compromise 

of a wrongful termination claim asserted by Hawran, the statements of Hawran and 

Nicholas at issue were admitted not to demonstrate defendants’ liability for wrongful 

termination, but to establish a binding agreement had been reached regarding the terms of 

Hawran’s resignation for purposes of a different, subsequent, breach of contract claim. 

Evidence Code section 1152 only prohibits ‘the introduction into evidence of an offer to 

compromise a claim for the purpose of proving liability for that claim.’” (Hawran v. 

Hixson, supra, 209 Cal.App.4th at pp. 296-297.)

III.

THE TRIAL COURT’S FAILURE TO FORCE AN ELECTION OF REMEDIES BY F&M TRUST DID 

NOT PREJUDICE THE VANETIKS.

The Vanetiks argue that the trial court erred by entering judgment both on 

F&M Trust’s claim for breach of the written securities purchase agreement and its 

fraud-based claims. 

A leading treatise describes the rule and rationale for the election of 

remedies doctrine as follows: “Under traditional doctrine . . . a plaintiff who has two 

‘inconsistent’ remedies must ‘elect’ between them and pursue only one of them. . . .

Remedies are traditionally found to be ‘inconsistent’ when one of the remedies results 

from ‘affirming’ a transaction and the other results from ‘disaffirming’ a transaction. 

Most typically the plaintiff has elected, or is forced to elect, between rescission and 

damages remedies, but the election rule may apply to any pair of affirming or 

disaffirming remedies . . . .” (2 Dobbs, Law of Remedies (2d ed. 1993) § 9.4, 

pp. 603-604.) 
17

In this case, F&M Trust did not seek relief based on a disaffirmance of the 

securities purchase agreement. The cause of action for breach of written contract sought 

damages for the breach of the securities purchase agreement—damages which resulted 

from the affirmance of the contract. The causes of action for fraud sought damages due 

to F&M Trust’s investment in Terra becoming valueless—damages which also resulted 

from the affirmance of the contract. Therefore, the breach of contract and fraud claims 

did not present an issue of seeking relief based on theories that both affirmed and 

disaffirmed the contract. The election of remedies doctrine was never implicated, and the 

trial court did not err in denying the requests to force F&M Trust to make an election of 

remedies.

“The doctrine of election of remedies, often invoked in the earlier cases, 

has been repeatedly criticized and seems to be falling into disfavor. Later California 

decisions illustrating binding election are comparatively rare, and the bar to a remedy is 

sustained on the principles of estoppel or res judicata rather than election. ‘At best this 

doctrine . . . is a harsh, and now largely obsolete rule, the scope of which should not be 

extended.’ [Citations.] [¶] Modern writers have contended that the only sound 

explanation for a doctrine of election of ‘remedies’ is that, in some situations, there may 

be a required choice of substantive rights. Thus, no person would be entitled to claim 

two inconsistent rights [citation], but a person would be free to select and change his or 

her alternative remedies or legal theories of recovery, by amending the complaint or by 

filing a new action, until such time as one of the inconsistent rights was finally vindicated 

by the satisfaction of a judgment or by the application of the doctrine of res judicata or 

estoppel.” (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 180, pp. 260-261.)

In this case, the jury was asked to make a single determination of the 

damages to be awarded to F&M Trust if they found liability under any or all causes of 

action. The jury awarded $750,000 in damages. Even if there was some theoretical 

difference between the damages resulting from breach of the securities purchase 
18

agreement and the damages resulting from fraud, the Vanetiks fail to show how they 

were prejudiced by the judgment. 

IV.

THE JURY’S VERDICT THAT THE VANETIKS WERE LIABLE FOR BREACHING THE SECURITIES 

PURCHASE AGREEMENT WAS SUPPORTED BY SUBSTANTIAL EVIDENCE.

Tony argues that F&M Trust failed to introduce any evidence supporting 

holding him liable for breaching the securities purchase agreement. We review the jury’s 

factual findings for substantial evidence. (Piedra v. Dugan (2004) 123 Cal.App.4th 1483, 

1489.)

It is undisputed that Tony did not sign the securities purchase agreement. 

The securities purchase agreement was signed by Miller on behalf of seller KLEL, and by 

Broidy on behalf of buyer F&M Trust. It is further undisputed that Tony was not an 

officer or director of KLEL. Broidy testified that the purchase of stock from “KLEL was 

just an accommodation.” Broidy further testified: “I was told that the Vanetiks 

controlled KLEL, and that Dean Miller was operating as the managing member at their 

request.” Broidy had been told Miller was a longtime friend and business associate of the 

Vanetiks.

In denying the Vanetiks’ motions for JNOV and for a new trial, the trial 

court found: “Nor does their contention that they should not be personally liable for this 

claim do any more than fill some of their available fifteen pages. They were the artful 

puppeteers who masterminded the scam that relieved the plaintiff of $750,000. That 

money was used to personally enrich these defendants and enable them to travel the 

world trolling for more big fish. Not a spoonful of dirt was turned in any Russian oil 

field. As near as the court can recall, there was no testimony that either of these 

defendants ever even visited the oil fields with any of the plaintiff’s money in their 

pockets. The jury surely had little trouble concluding that the Vanetiks should be 

personally liable for the misdeeds committed behind the screen of some corporate name.”
19

In this case, the jury was correctly instructed regarding the Vanetiks’ 

liability under theories of partnership and joint venture. Under either of those theories, 

the jury could have found the Vanetiks were parties to the securities purchase agreement. 

(Deicher v. Corkery (1962) 205 Cal.App.2d 654, 662 [each partner or joint venturer is the 

agent of the others in entering contracts benefitting the partnership or joint venture].) 

The jury was not asked in the special verdict whether it had found one or both of those 

theories to be true.

V.

THERE WAS SUBSTANTIAL EVIDENCE OF F&M TRUST’S DAMAGES

ON THE FRAUD-BASED CLAIMS.

The Vanetiks argue that F&M Trust failed to prove damages on the fraud 

causes of action. We review the jury’s factual findings regarding the amount of

compensatory damages for substantial evidence. (Piedra v. Dugan, supra, 123 

Cal.App.4th at p. 1489.)

One who is defrauded in connection with the purchase or sale of property 

may “recover the difference between the actual value of that with which the defrauded 

person parted and the actual value of that which he received, together with any additional 

damage arising from the particular transaction.” (Civ. Code, § 3343, subd. (a).) 

The Vanetiks rely primarily on Zinn v. Ex-Cell-O Corp. (1944) 24 

Cal.2d 290, in which the California Supreme Court held that under Civil Code 

section 3343, the value of stock is “determined by the worth of the corporate assets, not 

the ‘market value’ of the stock.” (Zinn v. Ex-Cell-O Corp., supra, at p. 297.) The 

American Law Reports, on which Zinn relies, does not apply to fraud actions similar to 

the one in this case. “[T]he measure of damages recoverable for misrepresentations 

affecting the value of corporate securities which one is induced to purchase in reliance 

upon the representations made is the difference between the true and actual value of the 

stocks or bonds purchased (usually determined as of the time of the purchase) and their 
20

value had the facts been as represented—the difference between the value thereof in the 

actual financial condition of the corporation at the time, and its value had the corporation 

been in the condition represented.” (Annot., Measure of Damages for Fraud Inducing the 

Purchase of Corporate Securities (1928) 57 A.L.R. 1142, 1143.) The Vanetiks did not 

misrepresent to Broidy the value of the stock F&M Trust was purchasing. Rather, the 

Vanetiks misrepresented how they would use the money being invested, claiming it 

would be used to uncap oil wells, when in fact they intended to use it to pay off existing 

debts. (See Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 

66 Cal.App.3d 101, 145 [Civ. Code, § 3343 “must be applied realistically so as to give 

the defrauded person his actual out-of-pocket loss and where necessary to reach that 

result, courts must consider subsequent circumstances”].)

VI.

THE PUNITIVE DAMAGES AWARDS AGAINST YURI AND TONY 

WERE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

6

The jury awarded F&M Trust $1.25 million in punitive damages against 

Tony, and $2 million against Yuri. Yuri and Tony argue that the punitive damages 

awards must be reversed because F&M Trust failed to offer sufficient evidence of their 

respective financial conditions. We agree.7

 

6

 After oral argument, we asked F&M Trust, Yuri, and Tony to brief nine questions 

relating to the law and the evidentiary record on the issue of punitive damages. Each of 

these parties filed two extensive supplemental briefs. We have considered all the 

arguments made in those briefs.

7

 On appeal, Yuri and Tony argue both that (1) F&M Trust failed to present sufficient 

evidence of their respective financial conditions, and (2) the punitive damages awards 

against them were excessive as a matter of law in light of their financial conditions and 

their alleged wrongdoing. Because we reverse the punitive damages awards against both 

Yuri and Tony based on the first argument, we need not reach the second.
21

A.

Applicable Law

“Evidence of a defendant’s financial condition is a legal precondition to the 

award of punitive damages. [Citation.] We examine the record to determine whether the 

challenged award rests upon substantial evidence. [Citations.] If it does not, and if the 

plaintiffs had a full and fair opportunity to make the requisite showing, the proper remedy 

is to reverse the award.” (Soto v. BorgWarner Morse TEC Inc. (2015) 239 

Cal.App.4th 165, 195.)

“‘The California Supreme Court has declined to prescribe any particular 

standard for assessing a defendant’s ability to pay punitive damages [citation], but it has 

held that actual evidence of the defendant’s financial condition is essential.’” (Morgan v. 

Davidson (2018) 29 Cal.App.5th 540, 551.) “A reviewing court cannot make a fully 

informed determination of whether an award of punitive damages is excessive unless the 

record contains evidence of the defendant’s financial condition.” (Adams v. Murakami

(1991) 54 Cal.3d 105, 110 (Adams).) The plaintiff has the burden to establish a 

defendant’s financial condition. (Id. at p. 120; Morgan v. Davidson, supra, 29 

Cal.App.5th at p. 551.)

While “there is no rigid formula and other factors may be dispositive 

especially when net worth is manipulated and fails to reflect actual wealth,” net worth is 

often described as “the critical determinant of financial condition.” (County of San 

Bernardino v. Walsh (2007) 158 Cal.App.4th 533, 546.)

A plaintiff seeking punitive damages must provide a balanced overview of 

the defendant’s financial condition; a selective presentation of financial condition 

evidence will not survive scrutiny. (See Baxter v. Peterson (2007) 150 Cal.App.4th 673, 

676; id. at p. 681 [record “silent with respect to . . . liabilities” is insufficient]; Kelly v. 

Haag (2006) 145 Cal.App.4th 910, 916-917 [no evidence (1) the defendant still owned 

the property, (2) of what encumbrances were on the property, and (3) of the value of the 
22

property]; Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 

1151-1153 [evidence only of the defendant’s income or the profits the defendant 

wrongfully gained is not meaningful evidence that can support an award of punitive 

damages]; Lara v. Cadag (1993) 13 Cal.App.4th 1061, 1063-1065 [evidence of income 

only is insufficient].) We may not infer sufficient wealth to pay a punitive damages 

award from a narrow set of data points, such as ownership of valuable assets or a 

substantial annual income.

B.

Evidence of Financial Condition of the Vanetiks

F&M Trust’s expert witness testified as to his methods for determining an 

individual’s net worth: “It’s just simply the . . . fair value of the individual’s assets that 

they own or have control over or rights to . . . less the fair value of the debts or 

obligations that they have. That difference, that net amount is considered an entity’s or 

an individual’s net worth. [¶] In addition, you also have to look at an individual’s cash 

flow or sources of income. For example, an individual may not own any assets because 

perhaps they are renting everything that they are using, but they may be generating a lot 

of cash flow that would enable them also to pay a judgment.”

F&M Trust’s expert witness testified that Yuri had a net worth of $411,000, 

and an annual income of $5,925,000.8 The expert also testified that Tony had a net worth 

 

8

 The basis of this opinion was that Yuri was manager of four corporations. Terra paid 

him $30,000 annually in compensation for serving on its board of directors. Yuri also 

served on the board of directors for several other for profit companies; one of these 

business had annual revenues in excess of $500 million. Terra claimed to own oil 

reserves worth $11 billion.

 Yuri also managed a real estate company that flipped 40 to 50 properties annually. He 

was the owner and sole employee of Vanetik International, which had revenues of 

$900,000 per year. 

 Yuri owned multiple expensive cars. Yuri claimed he had sold the bulk of his extensive 

wine collection (which included bottles worth $20,000); he maintained wine in lockers in 

various restaurants. He also bought, sold, and traded high-end watches, and he currently 
23

of $1,440,400, and no annual income.

9

 Although the expert purported to consider Yuri’s 

and Tony’s respective net worths, in actuality he considered only their assets, without any 

consideration of liabilities (on those assets or otherwise). As to Yuri’s income, the expert 

testified Yuri had an annual income of $5,000,000 from Vanetik International. The 

expert obtained that figure from checking and savings account applications submitted by 

the company to Wells Fargo in 2007 and in 2012, which claimed the company’s gross 

sales were $5,000,000. In addition to the remoteness in time of these applications, their 

use of gross sales and their lack of any supporting documentation makes them virtually 

useless for determining Yuri’s financial condition at the time of the trial. The expert also 

testified that Yuri had an annual income of $925,000 from a company called Dominion 

Partners. That figure was based on Dominion Partners’ profits from 2008 through 2010. 

Nothing in the appellate record supports that figure.

The expert valued Tony’s home at $900,000, based on the halfway point 

between the value on the Zillow Website and the assessed property tax value. The expert 

admitted that he did not know who actually owned the home, or whether there were any 

 

owned three such watches with an average value of $30,000 to $40,000; one watch had 

been acquired shortly after Broidy invested $750,000 in Terra, at a price of $57,000. 

Yuri, on average, charged $48,200 per month on an American Express black card. He 

had a social membership at the Shady Hills Golf Club.

9

 The basis of this opinion was that Tony was the chairman of the board of Turan 

Petroleum, owned Vanetik Engineering Consultants, was a partner in Darby Holdings, 

owned an interest in Archer Resources, and was a manager and 20 percent owner of 

Presidio Partners; Presidio owned 325 acres of oceanfront property in Hawaii which was 

scheduled for residential development. F&M Trust’s expert witness testified that Tony’s 

interest in the Hawaiian property was worth $500,000. Tony owned a Mercedes, a 

Mazda, and a Porsche, and drove a Bentley on which Archer Industries was paying 

$1,600 per month. Tony’s house, sculptures, jewelry, and diamonds were all held in his 

wife’s name. The sculptures included six or seven sculptures by Richard MacDonald that 

were purchased for $3,000 to $10,000 each. Tony’s personal charges on the American 

Express black card averaged $13,540 per month.
24

liens against it. The expert also valued Tony’s interest in a piece of real property in 

Hawaii at $500,000, based on a real estate appraisal that was not admitted in evidence.

Finally, the expert offered circumstantial evidence of Yuri’s and Tony’s 

incomes based on their monthly American Express statements. Yuri’s expenditures were 

$48,200 per month in 2011; Tony’s American Express expenditures were $13,540 per 

month at that time. Because those figures were from 2011, four years before trial, they 

were not relevant to a determination of Yuri’s and Tony’s current financial conditions.

In short, there was insufficient admissible evidence of Yuri’s and Tony’s 

current financial conditions to support the award of punitive damages. F&M Trust had a 

full and fair opportunity to make the requisite showing and failed to do so. Accordingly, 

we will reverse the awards of punitive damages. There shall be no new trial. (McCoy v. 

Hearst Corp. (1991) 227 Cal.App.3d 1657, 1661.)

C.

Estoppel Theory

F&M Trust argues that Yuri and Tony should be estopped from 

complaining about the absence of evidence regarding their financial condition because 

they failed to timely produce evidence of their finances. “[I]f a plaintiff is unable to 

provide the court with evidence due to the defendant’s failure to comply with discovery 

obligations, then punitive damages may be awarded without the requisite evidence.” 

(Morgan v. Davidson, supra, 29 Cal.App.5th at p. 551.) Because the burden was on 

F&M Trust to present evidence of Yuri’s and Tony’s financial conditions (Adams, supra, 

54 Cal.3d at pp. 119-123), it was also incumbent on F&M Trust to show why that burden 

should be excused. In the absence of such a showing, we are compelled to conclude that 

the award of punitive damages cannot stand. 

Initially, we note that F&M Trust did not raise the issue of estopping Yuri 

and Tony from challenging the sufficiency of the evidence of their financial conditions 

until F&M Trust filed its opposition to the Vanetiks’ JNOV motion. 
25

F&M Trust did not file a motion for pretrial discovery of a defendant’s 

financial condition pursuant to Code of Civil Procedure section 3295, subdivision (c)

with respect to Yuri or Tony. F&M Trust argues that it sought such evidence through 

other means of pretrial discovery, which the Vanetiks “vociferously” fought. F&M Trust 

therefore argues Yuri and Tony should be estopped from arguing F&M Trust did not 

provide sufficient evidence of their financial conditions. F&M Trust’s argument flies in 

the face of Code of Civil Procedure section 3295, subdivision (c), which precludes such 

pretrial discovery in the absence of a valid court order. “Section 3295 was enacted . . . to 

protect defendants from the premature disclosure of their financial condition when 

punitive damages are sought.” (Medo v. Superior Court (1988) 205 Cal.App.3d 64, 67.)

In Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, the appellate 

court held that a trial court may permit the discovery of a defendant’s financial condition 

after liability has been determined, even if the plaintiff did not file a motion for pretrial 

discovery of financial condition. (Id. at p. 609.) After the trial court ruled in favor of the 

plaintiff in a bench trial, it ordered the defendant to bring records regarding his net worth 

to the court the next day. (Id. at p. 603.) The defendant failed to do so, and the trial court 

awarded punitive damages to the plaintiff using a multiplier of the compensatory 

damages. (Id. at p. 604.) “So long as the trial court allows the defendant sufficient time, 

following a determination of liability, to collect his or her financial records for 

presentation on the issue of the amount of such damages to be awarded, there is nothing 

prejudicial or unfair about using such a process to try the issue of the amount of punitive 

damages.” (Id. at p. 609.) 

In this case, the trial court did not order Yuri or Tony to produce documents 

or other evidence of their financial condition, but rather to make their “best efforts” to 
26

provide the requested information before the punitive damages portion of the trial 

began.10 

Morgan v. Davidson, supra, 29 Cal.App.5th 540, cited by F&M Trust, is 

distinguishable. In that case, the plaintiff served written notice on the defendant’s 

attorney for attendance at a court hearing under Code of Civil Procedure section 1987, 

subdivision (b), to obtain evidence relating to the defendant’s financial condition. 

(Morgan v. Davidson, supra, 29 Cal.App.5th at p. 551.) Because the defendant failed to 

appear at the hearing, and therefore failed to comply with his discovery obligations, the 

plaintiff was excused from providing evidence of the defendant’s financial condition. 

(Id. at p. 552.) But in the present case, F&M Trust’s failure to timely serve any type of 

punitive damages discovery on Yuri or Tony means that this estoppel theory is 

inapplicable and F&M Trust was not relieved of its burden of offering admissible 

evidence of Yuri’s and Tony’s financial conditions.

F&M Trust’s failure to offer substantial evidence of Yuri’s and Tony’s 

current financial conditions, therefore, cannot be excused by the Vanetiks’ alleged failure 

to provide evidence of their respective financial worth. 

Finally, we wish to make clear that we are not holding that F&M Trust’s 

decision to not seek discovery under Code of Civil Procedure section 3295 would have 

barred it from recovery of punitive damages. We do conclude that F&M Trust did not 

offer admissible evidence supporting a punitive damages award and there is no legal 

excuse that relieves them from that burden.

 

10

 The hearing at which this “order” was made was not on the record, and there is no 

transcript of what was said. The parties, however, do not dispute this was the substance 

of what Yuri and Tony were ordered to do in terms of their financial information.
27

VII.

AWARD OF ATTORNEY FEES AGAINST THE VANETIKS

The trial court found that F&M Trust was the prevailing party in the 

litigation and awarded it attorney fees. The securities purchase agreement contains a 

prevailing party attorney fees clause.

Both Tony and Yuri argue that the awards of attorney fees against them 

must be reversed because F&M Trust failed to prove that either Tony or Yuri breached 

the securities purchase agreement. If a judgment is reversed, the attorney fee award must 

also be reversed. (Friends of the Hastain Trail v. Coldwater Development LLC (2016) 

1 Cal.App.5th 1013, 1037.) Neither Tony nor Yuri addresses any specific portion of the 

attorney fees award.

Because we affirm the breach of written contract claim against the 

Vanetiks, we also affirm the trial court’s award of attorney fees against them. The 

reversal of the punitive damages award does not affect the attorney fees analysis, and 

neither Yuri nor Tony argues that it does. 

VIII.

THE TRIAL COURT PROPERLY GRANTED THE WEED DEFENDANTS’ MOTION FOR JNOV

BASED ON THE LACK OF EVIDENCE OF A CONSPIRACY BETWEEN THE WEED DEFENDANTS 

AND THE VANETIKS.

11

The trial court granted the Weed defendants’ motion for JNOV based on 

Civil Code section 1714.10. “A motion for judgment notwithstanding the verdict may be 

granted only if it appears from the evidence, viewed in the light most favorable to the 

party securing the verdict, that there is no substantial evidence in support.” (Sweatman v. 

 

11

 In its opening brief, F&M Trust argued that the Weed defendants’ motion was not 

filed in compliance with the Code of Civil Procedure. The Weed defendants countered 

that the their papers had been properly filed and served, pursuant to Code of Civil 

Procedure section 629, and that F&M Trust was citing to outdated statutes and treatises. 

F&M Trust’s failure to respond to this argument in its reply brief indicates its concession 

that the JNOV motion was properly filed and served.
28

Department of Veterans Affairs (2001) 25 Cal.4th 62, 68.) On appeal, “we apply the 

substantial evidence test to the jury verdict, ignoring the judgment.” (Hasson v. Ford 

Motor Co. (1977) 19 Cal.3d 530, 546, overruled on other grounds in Soule v. General 

Motors Corp. (1994) 8 Cal.4th 548.)

There was no evidence at trial that the Weed defendants made any 

fraudulent misrepresentations to Broidy. Therefore, the Weed defendants’ liability 

depended on F&M Trust establishing that the Vanetiks and the Weed defendants were 

members of a conspiracy. The jury’s verdict shows it found the existence of such a 

conspiracy. In granting the Weed defendants’ JNOV motion, the trial court concluded 

that a conspiracy involving the Weed defendants could not be established by operation of 

Civil Code section 1714.10. The court’s minute order granting the JNOV reads in 

relevant part as follows:

“A principal contention of the Weeds is that defendant Richard Weed acted 

throughout this extended transaction solely in his capacity as attorney for the Vanetiks 

and that there was no basis for making him personally liable for the Vanetiks’ misdeeds. 

It is easy to understand why the jury would fault lawyer Weed for this fraud. The simple 

fact that he was counsel for the Vanetiks made it easy to find guilt by association. Weed 

submitted a very opaque bill to the Vanetiks for his services and thereby apparently got 

$50,000 of the funds that the Vanetiks extracted from the plaintiff. Because Weed was 

the escrow holder in this transaction, the plaintiffs’ money passed through his hands in 

transit to the Vanetiks’ pockets.

“Attorney Weed’s principal attack upon this verdict is based upon the terms 

of Civil Code section 1714.10, which limits the liability of an attorney to a third party for 

actions taken in the course of his/her representation of a client. In the present case, Weed 

was counsel for the Vanetiks. The plaintiff does not contend that Weed ever represented 

either the plaintiff bank or its depositor Broidy. In fact, the plaintiff had its own counsel 

(David Camel) who negotiated with Weed in an adversarial position while documenting 
29

the oil investment. However, that does not necessarily exculpate Weed. Section 

1714.10(c) deprives an attorney of any potential shield of this statute ‘where (1) the 

attorney has an independent duty to the plaintiff or (2) the attorney’s acts go beyond the 

performance of a professional duty to serve the client and involve a conspiracy to violate 

a legal duty in furtherance of the attorney’s financial gain.’ The court has concluded that, 

in this transaction, Weed came within the protective scope of section 1714.10 and that his 

work did not expose him to liability to Broidy or the plaintiff. These points may be 

pertinent:

“— The Vanetiks and the plaintiff each had their own attorney. Nothing 

here could have led the plaintiff to believe that Weed represented it or Broidy. Weed 

owed no independent legal duty to the plaintiff or to Broidy.

“— There was minimal actual contact between Weed and Broidy. 

Anything Weed then did or said could only reasonably be understood as actions taken on 

behalf of the Vanetiks.

“— The $50,000 fee the Vanetiks paid to Weed was for the latter’s 

professional services. As such, it is not evidence of action ‘beyond the performance of a 

professional duty . . . in furtherance of the attorney’s financial gain.’ There is no question 

that Weed performed professional services for the Vanetiks, for which he was entitled to 

be paid. The skimpy nature of his billing may have aroused the plaintiff’s suspicions, but 

this is not evidence of actionable misdeeds by Weed. Remember that the Vanetiks could 

document virtually none of their dubious expenditures; if they thought that Weed’s bill 

was adequate, this is a matter between lawyer and client and not proof of fraud.

“— The court has previously ruled that Weed’s actions as escrow holder in 

this doomed stock sale did not violate any of the terms of the parties’ escrow agreement. 

He obeyed the instructions that were given him by the parties to the escrow. The plaintiff 

could point to no contractual term that he breached. 
30

“The sanctity of the professional relationship between lawyer and client has 

led the [L]egislature to promulgate section 1714.10. The present claim is barred by that 

statute. The Weeds’ motion for judgment notwithstanding the verdict is therefore 

granted. One day, even the attorneys representing this plaintiff may invoke this code 

section when a zealous adversary challenges their representation of a client who is 

alleged—or even proven—to be a scoundrel.”

Civil Code section 1714.10 provides, in relevant part, as follows: “(a) No 

cause of action against an attorney for a civil conspiracy with his or her client arising 

from any attempt to contest or compromise a claim or dispute, and which is based upon 

the attorney’s representation of the client, shall be included in a complaint or other 

pleading unless the court enters an order allowing the pleading that includes the claim for 

civil conspiracy to be filed after the court determines that the party seeking to file the 

pleading has established that there is a reasonable probability that the party will prevail in 

the action. . . .

“(b) Failure to obtain a court order where required by subdivision (a) shall 

be a defense to any action for civil conspiracy filed in violation thereof. The defense 

shall be raised by the attorney charged with civil conspiracy upon that attorney’s first 

appearance by demurrer, motion to strike, or such other motion or application as may be 

appropriate. Failure to timely raise the defense shall constitute a waiver thereof.

“(c) This section shall not apply to a cause of action against an attorney for 

a civil conspiracy with his or her client, where (1) the attorney has an independent legal 

duty to the plaintiff, or (2) the attorney’s acts go beyond the performance of a 

professional duty to serve the client and involve a conspiracy to violate a legal duty in 

furtherance of the attorney’s financial gain.” (Id., subds. (a)-(c).)

Civil Code section 1714.10 is inapplicable in this case for two reasons. 

First, F&M Trust did not assert a cause of action against the Weed defendants “arising 

from any attempt to contest or compromise a claim or dispute.” (Civ. Code, § 1714.10, 
31

subd. (a).) Second, the Weed defendants raised the provisions of Civil Code section 

1714.10 for the first time in their motion for JNOV. The express language of 

section 1714.10, subdivision (b) requires that the defense be raised in the attorney’s “first 

appearance” in the case. The Weed defendants’ failure to do so waived their right to 

assert the defense under that statute. (Villa Pacific Building Co. v. Superior Court (1991) 

233 Cal.App.3d 8, 12; see Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1535 

[applying Villa Pacific’s analysis to Code Civ. Proc. § 425.13].) 

Nevertheless, the exceptions set forth in Civil Code section 1714.10, 

subdivision (c) are consistent with common law. “An attorney may be held liable for 

conspiring with his or her client to commit actual fraud or for the intentional infliction of 

emotional distress. [Citations.] But plaintiffs can state a viable claim only if the 

attorneys’ actions went beyond their role as attorneys acting on behalf of [their clients].” 

(Panoutsopoulos v. Chambliss (2007) 157 Cal.App.4th 297, 306.)

“To be sure, an attorney, acting in the scope of his or her official duties, and 

not for individual gain, can be liable to third parties in certain circumstances. But those 

circumstances will always require that the attorney have a duty to the third party. For 

example, if an attorney commits actual fraud in his dealings with third parties, the fact 

that he did so in the capacity of attorney does not relieve him of liability. [Citations.] 

Similarly, where an ‘attorney gives his client a written opinion with the intention that it 

be transmitted to and relied upon by the plaintiff in dealing with the client[,] . . . the 

attorney owes the plaintiff a duty of care in providing the advice because the plaintiff’s 

anticipated reliance upon it is “the end aim of the transaction.”’” (Pavicich v. Santucci 

(2000) 85 Cal.App.4th 382, 395.) 

F&M Trust argues that the Weed defendants owed it an independent legal 

duty because Weed was the escrow agent for the securities purchase agreement. An 

escrow agent is a “fiduciary of the parties to the escrow.” (Summit Financial Holdings, 

Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 711.) F&M Trust fails to 
32

explain how Weed’s role as the escrow agent could create a legal duty in connection with 

a separate contract to which the Weed defendants were not parties. F&M Trust also fails 

to address the trial court’s contrary ruling after the bench trial in favor of the Weed 

defendants and against F&M Trust on the causes of action for breach of fiduciary duty 

and breach of the escrow agreement.

The trial court correctly concluded there was insufficient evidence of 

(1) the existence of a conspiracy between the Weed defendants and the Vanetiks, (2) an 

independent duty to F&M Trust on the part of the Weed defendants, or (3) that the Weed 

defendants’ acts went beyond the performance of a professional duty to serve their 

clients. 

IX.

BECAUSE THE TRIAL COURT PROPERLY GRANTED THE JNOV IN FAVOR OF THE WEED 

DEFENDANTS, THE PUNITIVE DAMAGES AWARD AGAINST THEM WAS NECESSARILY 

REVERSED. IN ANY EVENT, THE TRIAL COURT WOULD HAVE CORRECTLY REVERSED THE 

PUNITIVE DAMAGES AWARDS AGAINST THE WEED DEFENDANTS.

The trial court’s ruling on the JNOV motion resolved all remaining claims 

against the Weed defendants; the punitive damages awards against the Weed defendants 

were necessarily vacated as well. Even if the JNOV had not been granted in favor of the 

Weed defendants, insufficient evidence supported the jury’s award of punitive damages 

against them. 

The trial court included an analysis of these punitive damage awards: “It is 

not now necessary to address a secondary issue raised by the Weeds. But the court will 

nevertheless express its view on the award of punitive damages against the Weeds. 

Succinctly, there was inadequate evidence to support any such award. The burden rests 

upon a claimant to present evidence of the amount that would be a fair and just award of 

such damages. No one can confidently claim to know exactly where the line is drawn 

between sufficient and insufficient competent evidence of the defendant’s ability to pay 

such damages. In regard to the Vanetiks, the court has already determined that the many 
33

bits of information cobbled together by the plaintiff presented an adequate picture of their 

net worth. Here, the plaintiff fell well short of that dividing line. The failure to get any 

pretrial discovery of relevant information or to present such in either the first or second 

phase of this trial required the plaintiff’s expert witness to hazard unsupported guesses 

about critical facts. This failure of proof undermined the award and would require that it 

be vacated.”

F&M Trust’s expert testified that Weed lived in a house worth about 

$1.997 million, and earned $223,000 from his law practice in 2014. The expert conceded 

he did not know whether Weed owned the house, whether there were any encumbrances 

on the house, or whether the value as stated on Zillow was accurate. The expert testified 

that Weed & Company, LLP and Weed & Company, L.C. had no value; counsel 

conceded during closing argument in the second phase of the trial that the law firms had 

“no net worth.”

In Lara v. Cadag, supra, 13 Cal.App.4th at page 1064, the court held that 

evidence of the defendant’s income, without more, was “wholly inadequate” to support 

an award of punitive damages against the defendant. Absent any admissible evidence 

that the house in which Weed lived was actually his property or that it had a net positive 

value, the only evidence supporting the punitive damages award was the evidence of 

Weed’s annual income. This is legally insufficient.

F&M Trust argues on appeal that net worth need not be proven, and that 

“evidence of the profit of ill gotten gains can be enough,” citing Cummings Medical 

Corp. v. Occupational Medical Corp. (1992) 10 Cal.App.4th 1291, 1299-1300. The 

problem with this argument is that F&M Trust fails to cite to anything in the appellate 

record showing “ill gotten gains” by the Weed defendants.

F&M Trust also argues that the Weed defendants presented no evidence 

regarding encumbrances against the property. A plaintiff bears the burden of proving its 

claim for punitive damages. (Adams v. Murakami, supra, 54 Cal.3d at p. 119.) F&M 
34

Trust failed to do so here, and the Weed defendants had no obligation to counter its 

evidentiary offerings. (Evid. Code, § 500; Mathis v. Morrissey (1992) 11 Cal.App.4th 

332, 346; Vaughn v. Coccimiglio (1966) 241 Cal.App.2d 676, 678.)

X.

THE TRIAL COURT DID NOT ERR IN NONSUITING THE BREACH OF CONTRACT CLAIM

AGAINST THE WEED DEFENDANTS.

At the conclusion of the jury trial, the Weed defendants orally moved for 

nonsuit on the breach of written contract claim against them. The Weed defendants 

argued that they were not parties to the securities purchase agreement, and therefore 

could not be held liable for any breach of that agreement. The trial court granted the 

nonsuit motion.

“We review a grant of nonsuit de novo, applying the same standard 

governing the trial court. [Citation.] As the Supreme Court has explained, ‘A defendant 

is entitled to a nonsuit if the trial court determines that, as a matter of law, the evidence 

presented by plaintiff is insufficient to permit a jury to find in his favor. [Citation.] “In 

determining whether plaintiff’s evidence is sufficient, the court may not weigh the 

evidence or consider the credibility of witnesses. Instead, the evidence most favorable to 

plaintiff must be accepted as true and conflicting evidence must be disregarded.”’ 

[Citation.] Consequently, the reviewing court ‘will not sustain the judgment “‘unless 

interpreting the evidence most favorably to plaintiff’s case and most strongly against the 

defendant and resolving all presumptions, inferences and doubts in favor of the plaintiff a 

judgment for the defendant is required as a matter of law.’”’” (Brand v. Hyundai Motor 

America (2014) 226 Cal.App.4th 1538, 1544-1545.) 

In its opening brief on appeal, F&M Trust argued that the Weed defendants 

and the Vanetiks were members of a joint venture, and that the securities purchase 

agreement was a contract reasonably necessary to carry out their enterprise. Missing 

from F&M Trust’s argument is a citation to any evidence in the appellate record relevant 
35

to whether a joint venture involving the Weed defendants was ever formed. In the 

absence of such evidence, the trial court correctly granted the nonsuit motion.

XI.

THE WEED DEFENDANTS’ APPEAL FROM THE JUDGMENT.

The trial court denied the Weed defendants’ motion for a new trial by 

operation of law when it failed to rule on the motion after having granted the JNOV 

motion. (Code Civ. Proc., § 660, former subd. (c); see generally In re Marriage of Liu 

(1987) 197 Cal.App.3d 143, 149.) The Weed defendants filed a protective appeal from 

the judgment. (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 240 

[order denying motion for new trial is nonappealable and must be reviewed on appeal of 

underlying judgment].)

Because we have affirmed the trial court’s order granting the JNOV 

motion, we dismiss as moot the Weed defendants’ appeal from the judgment.

XII.

AWARD OF ATTORNEY FEES AGAINST F&M TRUST

AND IN FAVOR OF THE WEED DEFENDANTS.

After the trial court entered judgment in their favor, the Weed defendants 

filed a motion for attorney fees. The Weed defendants argued that the securities purchase 

agreement and the escrow agreement, both of which they were alleged to have breached, 

contained provisions authorizing the recovery of attorney fees by a prevailing party in 

litigation involving the agreements. The trial court granted the Weed defendants’ motion. 

F&M Trust argues that the award of attorney fees against it and in favor of 

the Weed defendants must be reversed if this court reverses the judgment in favor of the 

Weed defendants. (Friends of Hastain Trail v. Coldwater Development LLC (2016) 

1 Cal.App.5th 1013, 1037 [reversal of judgment requires reversal of attorney fee award].) 

F&M Trust does not otherwise challenge the Weed defendants’ entitlement to attorney 

fees, nor does it challenge any specific portion of the attorney fees award.
36

Because we have affirmed the trial court’s order granting the JNOV 

motion, we also affirm the court’s award of attorney fees against F&M Trust.

DISPOSITION

The awards of punitive damages against Yuri Vanetik and Anatoly Vanetik 

are reversed and there shall be no new trial. In all other respects, the April 15, 2016, 

judgment in favor of F&M Trust and against Yuri Vanetik and Anatoly Vanetik is 

affirmed. Because all parties prevailed in part in appeal Nos. G053688 and G053689, in 

the interests of justice no party shall recover costs on those appeals. 

The August 29, 2016, postjudgment order awarding attorney fees to F&M 

Trust and against Yuri Vanetik and Anatoly Vanetik is affirmed. F&M Trust to recover 

costs in appeal No. G054218. 

The July 8, 2016, judgment in favor of the Weed defendants and against 

F&M Trust is affirmed. The August 29, 2016, postjudgment order awarding attorney 

fees to the Weed defendants and against F&M Trust is affirmed. The Weed defendants to 

recover their costs on appeal. The Weed defendants’ cross-appeal in appeal 

No. G053978 is dismissed as moot. 

FYBEL, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

THOMPSON, J.
Filed 3/27/19

CERTIFIED FOR PARTIAL PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

FARMERS & MERCHANTS TRUST 

COMPANY, as Trustee, etc.,

Plaintiff and Respondent,

 v.

YURI VANETIK et al.,

Defendants and Appellants.

 G053688 (consol. with G053689,

 G054218)

 (Super. Ct. No. 30-2013-00688150)

 ORDER MODIFYING OPINION AND

 GRANTING REQUEST FOR 

 PARTIAL PUBLICATION; NO 

 CHANGE IN JUDGMENT

FARMERS & MERCHANTS TRUST 

COMPANY, as Trustee, etc.,

Plaintiff and Appellant,

 v.

RICHARD WEED et al.,

Defendants and Appellants.

 G053978

 

 (Super. Ct. No. 30-2013-00688150)

Defendants and Appellants Richard Weed, Weed & Co., L.C., and Weed & 

Co. LLP and their appellate counsel, White & Reed and Michael R. White, have 

requested that our opinion, filed on February 27, 2019, be certified for partial publication. 

It appears that portions of our opinion meet the standards set forth in California Rules of 
2

Court, rule 8.1105(c)(2)-(4). The request for partial publication is GRANTED pursuant 

to California Rules of Court, rule 8.1110.

This opinion is ordered published in the Official Reports with the exception 

of parts I, II, III, IV., V., VII., X., XI., and XII. of the Discussion, and their subparts.

FYBEL, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

THOMPSON, J.